All Articles / Jul 21, 2020

Take advantage of the Disability Tax Credit

If you care for someone in need, you need to know about the benefits of an RDSP.

Only 36.2 per cent out of approximately 466,000 Canadians who are eligible for the Disability Tax Credit have a Registered Disability Savings Plan (RDSP), according to 2017 Employment and Social Development Canada statistics. 

This means the available government incentives for this segment of the population are not being paid out to those who may need it most. 

Launched in 2008, an RDSP is a government-assisted and tax-deferred savings account designed to help parents and relatives save for the long-term financial security of a child or relative (the beneficiary) who qualifies for the Disability Tax Credit. 

Non-deductible contributions to an RDSP can be made by anyone and there’s no annual contribution limit, however, there is a lifetime limit of $200,000. Investing in an RDSP will provide the beneficiary with an additional source of income in the future without impacting most provincial disability benefits and other federal income-tested benefits.

The Canada Disability Savings Grant (CDSG) and the Canada Disability Savings Bond (CDSB) are federal programs that provide payments to RDSPs to encourage long-term savings through an RDSP.  Grants and bonds are available to beneficiaries up until December 31st in the year they reach age 49.

From 2008 to 2017, approximately $1.8 billion in grants and $837.5 million in bonds were paid into RDSPs by the Government of Canada. In 2017, only $351.6 million in grants were paid into RDSPs, out of a possible $1.6 billion. That’s a lot of missed opportunity!

Regular withdrawals can begin at any age, subject to grant and bond withholding restrictions. However, withdrawals must be initiated by the end of the beneficiary’s 60th year. A variety of income tax scenarios apply.

Please reach out to your Kindred financial planner if you believe an RDSP can benefit someone you love. We’d be happy to explain the long-term benefits, to help you understand how the payment structure would work, and to set up your RDSP to take advantage of the government incentives that are available.


Excerpted from the Central 1 blog “Thousands of disability tax credit eligible Canadians missing out on available government incentives”, originally published June 17, 2020.

Mutual funds and other securities are offered through Qtrade Advisor, a division of Credential Qtrade Securities Inc. Mutual funds are offered through Qtrade Asset Management Inc. The information contained herein is provided for general informational purposes only and is not intended to provide, and should not be relied upon as providing, legal, accounting, tax, financial, investment or other advice, or a solicitation to buy or sell any securities. Economic and market conditions are subject to change.

Paul Arsenault

Paul Arsenault, CFP®, PFP®, RIS, CKA®

Manager, Financial Planning / Kindred Credit Union Branch Compliance Manager / Qtrade Asset Management Inc. Paul has a wealth of experience helping members achieve their goals as a CERTIFIED FINANCIAL PLANNER® professional. He coaches Kindred’s Financial Planning Team and acts as our compliance manager for Qtrade Asset Management Inc. In addition, Paul is passionate about sharing his knowledge around RDSPs with members and organizations.

Comments are closed.